UK Inflation has increased from 0.9% in October to 1.2% in November

GB POUND
The pound held on to its gains from last week as it started the week trading at 1.1920 against the Euro, and 1.2610 against the US dollar.

Inflation in the UK has increased from 0.9% in October to 1.2% in November. This is the highest level since 2014. It is thought that the fall in food prices, higher fuel costs and food price deflation are the key factors behind the rise.

The jobless rate in the UK has remained at 4.8%, an eleven-year low, but the number of people in work has dropped to 31.762m, the first fall since 2015, also the number of people claiming unemployment benefits increased in November by 2,400 to 809,000.

The Bank of England voted to leave interest rates unchanged at this month’s MPC meeting, they also voted to leave its quantitative easing programme unchanged.

EURO
Greece and the IMF appear to be on a crash course. The International Monetary Fund has hit back at critics who blame them for the latest austerity plans in Greece. Last week the Greek government’s spokesperson accused the IMF and European negotiators of “insisting on continuing a policy of extreme austerity which has been proven destructive for society and also economically ineffective”.

Greece is in the process of negotiating a new short relief package, but what will happen in the long term is still unclear.

Economic sentiment in the eurozone has improved. The ZEW economic sentiment barometer came in ahead of expectation, forecast at 16.50 the actual figure was 18.1.

US DOLLAR
On Wednesday the US dollar lost ground against all of the majors, as a raft of negative economic data emerged;
Core retail sales came in at 0.2 against the forecast of 0.4. Industrial production came in at -0.2 against the forecast of -0.1. Business inventories came in at 0.2 against the forecast of 0.1 which is the largest decline in eleven months.

Also on Wednesday the Federal Reserve finally increased its key interest rate by 0.25%, this is the second time in a decade the Fed has raised rates.

An interest rate hike is a firm indicator that the US economy no longer needs to rely on stimulus measures to grow, the US economy has now expanded for the past seven years, the unemployment rate is at 4.6%, its lowest level for nine years. The Fed also hinted that it could issue another two hikes next year.

Elsewhere
The South African rand has been slowly recovering since the outcome of the US election. ZAR quite often rallies in line with global expectations. Donald Trumps has big plans to transform America’s crumbling infrastructure which has supported the ZAR due to an expected increase in commodities.